A court loss by a brash copycat doesn't look good, but time is on Aereo's side.

Streaming video company FilmOn lost a major court battle late last week. Since that event, though, reactions and comments haven't really focused on FilmOn, a company that has gone through multiple iterations and legal setbacks. Rather, the focus has been on what it means for Aereo—which, so far, is the only TV-over-Internet company that seems like it has a chance of pushing through legal attacks brought by broadcasters.

Aereo's business involves setting up vast arrays of tiny antennas, which capture over-the-air television and send it to its users over the Internet. By giving each customer their own antenna, Aereo makes clear that the capturing and saving of the television content is done at the direction of its users. Aereo's business model has been ruled legal by a federal judge and the US Court of Appeals for the 2nd Circuit.

Aereo's success spawned FilmOn, an oddball competitor that has now fumbled seriously in court. The broadcasters that have sued Aereo around the country are already trying to make hay out of the FilmOn decision, filing papers in their Boston lawsuit to make sure the judge is aware of FilmOn's loss.

FilmOn: two misfires

There's no love lost between Aereo and its johnny-come-lately competitor. Earlier this year, FilmOn launched a new streaming service under the name "barrydriller.com," a play on the name of Aereo investor Barry Diller. After a court injunction convinced it to stop using that name, FilmOn tried to call itself "Aereokiller," and used trade names like Aero and Aero.tv. Aereo promptly shut those down with a March trademark lawsuit, arguing that FilmOn and its president Alki David were deliberately trying to confuse consumers. FilmOn agreed to a settlement under which it stopped using the name.

This isn't the first time FilmOn has stumbled in trying to build a TV-over-Internet business. In 2010, it jumped into the unlicensed streaming business with no warning, at the same time that another online video service, ivi TV, was preparing to launch a long-planned defense of the copyright attack it knew would be on the way from television networks. ivi TV ultimately sent out press releases detailing how its plan differed from FilmOn, and even denouncing FilmOn's sudden streaming of all kinds of channels as an obvious violation of copyright. FilmOn was slapped with an injunction in that case. While ivi TV managed to get its case separated from FilmOn, it too succumbed to the networks' litigation.

FilmOn's lawyers have said it will appeal its most recent loss, and it is already appealing a separate loss in a California federal court. "I think Judge Collyer didn’t do sufficient analysis,” the company's lawyer told Bloomberg News. “I’m surprised she ruled before even having a hearing.”

Whereas Aereo has won two key court victories, FilmOn keeps losing. Its most recent loss has observers on all sides wondering what it means for Aereo. The consensus is: nothing good.

Bad news for Aereo, any way you look at it

The Copyright Alliance, a trade group funded by many content companies, including those litigating against FilmOn and Aereo, celebrated the victory in a weekend blog post. The post quotes the tough language Judge Rosemary Collyer used against FilmOn, but the Alliance notes that the company operates "in the same vein as Aereo."

"This... increases the probability that FilmOn X, Aereo, and broadcasters will ultimately appear before the Supreme Court," writes the Alliance. "Add to that the continuing harm that the Second Circuit’s Aereo holding is causing to broadcast television, and it is becoming more vital that the Supreme Court steps in to correct that court’s flawed interpretation."

Coming from a very different point of view, Electronic Frontier Foundation lawyer Mitch Stoltz wrote a reaction piece as well. He complains that TV broadcasters "want control of the entire TV-viewing experience from camera to eyeball and can't stand the thought of technology companies enhancing the user experience." Collyer's order barely considered the public's rights, making the alarming statement that the public interest "can only be served by upholding copyright protections." That ignores the balance needed between the rights of authors and the rights of the public, writes Stoltz.

For its part, Aereo told The Verge that "it's business as usual," and wouldn't comment on the FilmOn case. But copyright law professor Jane Ginsburg told the publication that the nationwide reach of the FilmOn ruling is, indeed, bad news for Aereo.

Aereo's win in the 2nd Circuit remains the only appellate-level decision to consider the issue. It doesn't bode well for Aereo that the next case to be considered is FilmOn's case, not its own.

A road to the Supreme Court

There are now four appeals courts that may weigh in on the legality of TV-over-Internet. The Aereo decision has come in the 2nd Circuit, FilmOn has an appeal pending in the 9th Circuit and has pledged to appeal the Washington DC case as well, and Aereo was recently sued in Boston, which is in the 1st Circuit.

With the legal cacophony, it's hard to imagine that the case won't go to the Supreme Court at some point in the future. But as Jeff Roberts at GigaOm points out, that's not likely to happen until 2015. That's because late 2014 is the earliest date by which we're likely to see a circuit split.

And time, as Roberts notes, is on Aereo's side. Widespread use and acceptance of a new technology can make a difference in how judges perceive a case. By the time the famous Betamax case was decided by the US Supreme Court in 1984, eight million VCRs were in use in the US, and five million more were expected to be sold over the course of the year.

56 Reader Comments

Gogo Aero! IANAL, but the whole concept is so perfectly legitimate and true to the natural progression of technology that so long as they stay the course I really, really want Aero to be OK. AFAIK it really is no different to having a DVR you can control over the Internet, which output is plugged in to an Internet stream rather than a TV.

Of course content producers are going to have a problem with it. But hey, they could always make use of new tech rather than fighting it. IIRC the YouTube series "H+" was produced by WB and had ads, which were tolerable because the content was worth it and could be accessed on demand. Plus you could always switch tab if you want (like flicking channels, really).

And when this entire lawsuit is said and done you'll already be able to get all of these same channels through sanctioned channels for about the same price... This is a well publicized race to reiterate the age old q&a "Who will win? The lawyers!"

It seems like the broadcasters have become too comfortable with their permits on the public TV bandwidth, that they seem to consider the whole thing to be their domain to do with as they please, and anyone who doesn't follow exactly their expected use case can be sued into oblivion. This is not acceptable.

When we made the switch to digital broadcasts, we should have taken the opprotunity to revoke the whole spectrum, and instead offered it back to them, and anyone else, an API of some sort to submit content for broadcast, with the understanding that the content could and would be broadcast via all available means: Digital OTA TV broadcasts, Unencrypted internet availability, radio simulcasts, whatever the best means of dissemination happens to be at the moment. Any abuse of this system for the purposes of actual copyright infringement could then be handled on a case by case basis, but the broadcasters would not be able to harass companies like Aereo for simply transcoding broadcasts from one medium to another (as this would be implicitly assumed already).

But no, we were not very forward thinking, we essentially brought a 1950's attitude to television into the 21st century for no good reason.

Anything outside of the 2nd Circuit was bound to go poorly. The only thing that propped up Aereo was a (in my opinion) bad interpretation of Cablevision.

I agree, anything I don't implicitly agree with is a "bad interpretation". Really those content thieves shouldn't be trying to follow the law so closely with their ridiculous scheme brought upon by the ridiculous laws they have to follow. The fact they chose to ridiculously circumvent our ridiculous laws with their ridiculously legal scheme is ridiculous.

I can't wait for the day that this lawful service is smashed and I can feel smug on the internet about all those people who can no longer see publicly available television anymore. Those plebeians!

All I can say is I'll continue to enjoy Aereo until they close or a better service arrives. And that I think they are providing me a massive benefit: my house is in a dip and the ONLY way to get terrestrial television is for them to host my antenna.

Anything outside of the 2nd Circuit was bound to go poorly. The only thing that propped up Aereo was a (in my opinion) bad interpretation of Cablevision.

If I rent an apartment and my landlord includes an antenna as part of the rental are either myself or my landlord then guilty of infringement?

In this situation an antenna doesn't retransmit so this is simply standard reception using a long cable. If he includes a DVR then it gets more interesting, but given that is is simply being paid to assist me in getting what I should be able to and is charging only for providing the service, what's it got to do with any cable company. If he was replacing the ads they can complain, but I can legally watch terrestrial TV using technology to assist me, so why not pay someone to rent that technology?

So FilmOn looks like a plant. A doofus corporation set up to fail and provide legal ammunition for the TV industry against Aereo.

Am I paranoid, or what?

That's exactly my thought. I guess we'll find out when it turns down Aereo's legal counsel when it heads to the supreme court. If Aereo (or the like) ever offers to help defend the company, and FilmOn declines counsel, you know it's a shell company for the broadcasters to try to plant favorable legal precedence.

The content owners give morons a bad name. The more people watching their worthless content, (Who wants to fart like a billionaire), the more money they make. They should just require usage tracking and say, thank you for giving us more viewers.

Does it hurt their income when I watch NYC local news, when in Texas or LA?

I'm still failing to see how this is any different than an individual laying a really long cable from their home to an antenna in another county, city or state. If each antenna represents only one subscriber, it would seem Aereo is well within the law. No matter how much broadcaster dislike it.

Let's also not forget, the MPAA, RIAA, and lobbyists representing broadcasters have railed against every single new technology, like, ever. The MPAA and broadcasters wanted the VCR DOA. Yet, look at what huge revenue streams would not exist for them had that happened. Movies that flop theatrically can often become profitable through the home video market and rentals. Dredd sold something like 650,000 copies upon release of the DVD/Bluray:

[Lionsgate] announced today that the home entertainment release of DREDD claimed the number one spot on the DVD sell-through and Blu-ray charts with 650,000 units sold, making it the best-selling new release title of the year. Blu-ray units accounted for nearly 50% of week 1 POS at retail. In addition, the critically acclaimed thriller, starring Karl Urban (Star Trek) as the titular character Judge Dredd, was the top film download for the week, outpacing all other titles in digital sales as well.

Does FilmOn use the same multiple antenna method of transmission as Aereo? I can only see this really being an issue if they do, otherwise the existing protection still applies

As far as I know, no, just plain old streaming, which other startups like Aereo even said was blatant copyright infringement under current law. And, as others have postulated, I wouldn't be surprised if FilmOn was indeed a startup funded by the media conglomerates just to try and create precedent (even though Aereo's method is completely different - and thus far validated by the courts).

Just look at the names FilmOn used prior to FilmOn (barrydriller.com, AereoKiller, Aero), which were eventually shut down due to suits from Aereo over trademark violation, or in the case of barrydriller.com - court injunction. There seems to be an underlying animosity that could only stem from the current litigants against Aereo, the broadcast media conglomerates.

FilmOn, apply directly to your Internet, and get sued into oblivion like every other streamer who didn't pay for the bulk licensing...FilmOn...I would feel bad for them but the idea was really poorly thought out...FilmOn.

I don't think I've seen this mentioned explicitly, but does Aero strip out commercials? I looked at their site and it doesn't seem to. It would seem to me that the broadcasters would be happy for more eyeballs to be on their show, because the advertisers would be happy for more eyeballs on their show.

But they're not happy. Why is that? Do these Aero/internet eyeballs not count? Bypassing the traditional model, the advertisers are somehow refusing to let Aero viewers count? I seem to remember a similar thing happening when DVRs came out. The advertisers said that time-shifting no longer counted and they didn't have to pay. (And in way, they were right, when you consider that I fast-forward through commercials when I record). I think that if I were a broadcaster, that would upset me too, the idea that "X" number of people were watching my show. And now some of those guys are watching it a different way. Say that number is (Y + Z), where Y is the number of people who already watched my show, and Z is the number of new viewers. I ought to be able to got to my advertisers and say my show is worth more to them because I'm bringing them (X + Z) eyeballs. But they say no, my show is actually worth (X - Y) because the new method of watching doesn't count.

It has always seemed to me that once you throw your program material out over the public airwaves, you lose the right to control what people do with it from that point on. If you had some kind of signed agreement with them, that would be a different matter.

quote:"want control of the entire TV-viewing experience from camera to eyeball, and can't stand the thought of technology companies enhancing the user experience."

I consider reducing the bitrate of aereo's rebroadcast an Affront to enchancing the visual quality. Or better put, they reduce the quality.

the only way Aereo is a champion of that quote is if they re-broadcast the TV signal at the same bit rate...

BTW, a bit off topic... NETFLIX's content is about 5Mbps while broadcast TV is 15 Mbps, and NETFLIX tends to look better. but NETFLIX is not rebroadcasting the signal they reencode the original master (at least I think they do, in order to get the visual quality )

TL;DR... Aereo rebroadcasts the signal, by reencoding the original signal at a reduced the bitrate. I have not read that they send the original bitrate over the internet to their subcribers.

Am I crazy, or is this article missing a couple paragraphs that describe exactly what FilmOn does relative to Aereo, and what case it actually lost?

Quote:

FilmOn has an appeal pending in the 9th Circuit and has pledged to appeal the Washington DC case as well...

Like, what does "the Washington DC case" refer to?

Agreed, with a little more meat this could be a much better article. I still have no idea if FilmOn is using the same "thousands of tiny antennas" that Aero does or something different. Seems kind of important to me.

quote:"want control of the entire TV-viewing experience from camera to eyeball, and can't stand the thought of technology companies enhancing the user experience."

I consider reducing the bitrate of aereo's rebroadcast an Affront to enchancing the visual quality. Or better put, they reduce the quality.

the only way Aereo is a champion of that quote is if they re-broadcast the TV signal at the same bit rate...

BTW, a bit off topic... NETFLIX's content is about 5Mbps while broadcast TV is 15 Mbps, and NETFLIX tends to look better. but NETFLIX is not rebroadcasting the signal they reencode the original master (at least I think they do, in order to get the visual quality )

TL;DR... Aereo rebroadcasts the signal, by reencoding the original signal at a reduced the bitrate. I have not read that they send the original bitrate over the internet to their subcribers.

The user experience is more than just visual quality. The advantage of Aereo is convenience.

So this article talks about the history and implications of a decision against FilmOn, a "Streaming video company," without mentioning any details as to how FilmOn operated, what the decision actually was, or providing any links about the decision.

Bloody useless. You might as well tell us that Diana Nyad just swam up, thoroughly exhausted, to a Florida beach, share all the preparations she made for her swim and the reactions to it afterwards, but forget to mention she left from Havana.

Collyer's order barely considered the public's rights, making the alarming statement that the public interest "can only be served by upholding copyright protections."

Alarming is right. How can the public interest only be served by upholding copyright protections? That doesn't make sense. It seems to me that the public interest is served best when there is no copyright protection (i.e., works are in the public domain).

I haven't read the order, but how exactly does this legal opinion affect Aereo when Aereo's business model of 'an antenna for each subscriber that provides non-public performances of copyrighted works' has already been tested in the 2nd Circuit? If FilmOn's business model was not comparable, then how would Aereo be affected (notwithstanding judges whose decisions defer to copyright holders).

I do not see this as being bad news for Aereo. One out of control and brain-dead stupid judge making an illegitimate ruling based on his own personal viewpoint and not the law is not a 'huge setback' like Ars is trying to make it out to be.

I don't think I've seen this mentioned explicitly, but does Aero strip out commercials? I looked at their site and it doesn't seem to. It would seem to me that the broadcasters would be happy for more eyeballs to be on their show, because the advertisers would be happy for more eyeballs on their show.

No. Aereo provides an unmodified recording or live stream of the terrestrial transmission. With commercials and bad timing (missing show starts etc.) I.e. just like a real antenna.

They do provide a DVR capability but people can do that at home with any number of boxes, so there is no difference other than the antenna is remote. I am paying for someone to put the antenna up for me and renting a little box.

It's a shame that we spend all our time splitting hairs and going over semantics in a law book to determine whether something is legal or not. True, that is the technical definition of "legal" and the legal system is "technically" doing its job, but maybe that's not the discussion we need to be having.

Maybe we need to look at the stranglehold these content behemoths have on all TV, movies and music, and realize that this system rarely ever benefits the American people as a whole.

Collyer's order barely considered the public's rights, making the alarming statement that the public interest "can only be served by upholding copyright protections."

Alarming is right. How can the public interest only be served by upholding copyright protections? That doesn't make sense. It seems to me that the public interest is served best when there is no copyright protection (i.e., works are in the public domain).

Without having read the order, it sounds like the Coase Theorem, where the government's job is to enforce property rights and the market's job to negotiate access and fees. Under the assumption of costless bargaining (no lawyers) and no transaction costs (no taxes), it does lead to the socially optimal solution.

Ronald Coase himself was annoyed that this is called the Coase Theorem, because the bulk of his academic work centered on the economic effects of costly bargaining and positive transaction costs. Assuming these forces away is roughly equivalent to assuming away gravity and electromagnetism in physics.

All I can say is I'll continue to enjoy Aereo until they close or a better service arrives. And that I think they are providing me a massive benefit: my house is in a dip and the ONLY way to get terrestrial television is for them to host my antenna.

Agreed. I live in California's High Desert, and the only way for me to get more than a couple of weak local UHF stations would be to buy a massive directional roof-mounted antenna with a powerful amplifier and point it towards LA. An Aereo-like service would be perfect for me.

The networks should never have been allowed to charge carriage fees to cable/satellite providers for signals they put out for free over the public airwaves. That is the root of this problem.

From the first paragraph: FilmOn X assigns an individual user the content stream from one of thousands ofminute antennas that it operates in major metropolitan areas, including Washington, D.C. So it could be bad for Aereo.

The biggest problem I would think that the broadcasters would have is the local market dilution/aggregation of eyeballs into large markets. If your antenna is within physical proximity of your TV, then the local broadcaster is assured of your eyeballs because you are forced to use their television market area, and their advertising revenues are able to be easily understood and marketed.

If your antenna can be anywhere, you can watch any market you want. You may not watch your local market, you might tend to watch more of the larger markets stations who have enough money for larger productions and even independent series. Now your local station has lost your eyeballs and can't get advertising revenue for them.

This has been the argument around carriage fees and regulations of who can get rebroadcast for decades. This is why, even though DIRECTV carries all the major markets for local TV, you can only get your local market authorized. It pits small local/rural broadcasters against large urban ones, and the small ones are likely to lose. If Aereo were to prevent market diilution then this would just be another rebroadcast.

Of course, now that Sinclair owns many of the local stations, and most of the others are owned by some other large congomerate, perhaps the point is moot.

The biggest problem I would think that the broadcasters would have is the local market dilution/aggregation of eyeballs into large markets. If your antenna is within physical proximity of your TV, then the local broadcaster is assured of your eyeballs because you are forced to use their television market area, and their advertising revenues are able to be easily understood and marketed.

If your antenna can be anywhere, you can watch any market you want. You may not watch your local market, you might tend to watch more of the larger markets stations who have enough money for larger productions and even independent series. Now your local station has lost your eyeballs and can't get advertising revenue for them.

This has been the argument around carriage fees and regulations of who can get rebroadcast for decades. This is why, even though DIRECTV carries all the major markets for local TV, you can only get your local market authorized. It pits small local/rural broadcasters against large urban ones, and the small ones are likely to lose. If Aereo were to prevent market diilution then this would just be another rebroadcast.

Of course, now that Sinclair owns many of the local stations, and most of the others are owned by some other large congomerate, perhaps the point is moot.

It's also not relevant to Aereo's business model, as they only sold their service to people who were in the viewing range.

I'm still failing to see how this is any different than an individual laying a really long cable from their home to an antenna in another county, city or state. If each antenna represents only one subscriber, it would seem Aereo is well within the law. No matter how much broadcaster dislike it.

The difference is that nobody is going to realistically lay a really long cable to another city or country just to watch their own personal tv. The technology in this case is doing something that the law hasn't anticipated. What this means is courts fumbling trying to interpret today's technology with yesterday's laws, followed by the passing of new laws and modification of existing laws. As much as consumers want to watch TV anywhere, it is much more likely that politicians will modify the existing laws so that the "really long cable" scenario is classified as "rebroadcasting". The industry didn't accept Napster, it created the DMCA, fought back, and effectively killed Napster. They will try to do the same thing here, and my money would be on them succeeding.

The difference is that nobody is going to realistically lay a really long cable to another city or country just to watch their own personal tv.

That's already done. It's called the Internet, and in order to make the cost manageable it uses something called the Internet Protocol (IP) to multiplex access to those really long cables between a large number of people, companies, and use cases.